BEIJING, China (CNN) -- China rejected a U.S. report concluding that the Chinese military is secretly increasing spending to break into U.S. military computer systems, expand its Navy, and invest in intercontinental nuclear missiles and weapons to destroy satellites.

Chinese military officers after a meeting about the People's Liberation Army in 2007.

The United States must "abandon Cold War thinking" and adopt a better understanding of China to "promote a constructive Sino-U.S relationship," Chinese Foreign Ministry spokesman Qin Gang said Tuesday.

An annual Pentagon report to Congress said Monday that China's total military spending in 2007 was between $97 billion and $139 billion, but because of a lack of transparency, it's hard to tell exactly how much was spent and on what.

Xinhua -- China's official news agency -- said Tuesday that the country's 2008 military budget would rise by nearly 18 percent to $57 billion.

In comparison, the U.S. military budget request for 2008 is $481.4 billion, not including war requests.

Pentagon officials said a chunk of China's spending went to cyber warfare, as 2007 saw continued several "intrusions" believed to be from the Peoples Liberation Army (PLA). In the incidents, U.S. military unclassified computer systems were broken into and information was taken, according to Pentagon officials.

The Chinese spokesman said the Pentagon report was "interfering with China's internal issue and violating the standard of international relationship."

He said China's policies are peaceful and defensive.

"We are playing the crucial role to maintain peace in the Asia Pacific region and the world, and we are not a threat to any countries," Qin Gang said.

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"We require the United States to abandon the Cold War thinking, understand China and its development in the right way, redress the misunderstanding on China's military report, and conduct action to promote constructive Sino-U.S relationship," he said.

He said the United States should "stick to the promise on opposing Taiwan independence, stop selling weapons to Taiwan and any kind of contact between the two militaries.

"Stop giving any wrong signals to Taiwan independence force, stay with China to maintain stability in Taiwan sea and Sino-U.S relationship," he said.

The Pentagon report said China was investing heavily in and fielding improved nuclear intercontinental ballistic missiles and anti-satellite missiles.

The United States expressed its concern last year after China fired a missile at one of its old satellites and destroyed it, sending thousands of dangerous pieces of space debris around orbit.

The United States conducted a similar strike last month on a broken U.S. spy satellite before it re-entered the Earth's atmosphere. U.S. officials said the satellite was hit and broke into thousands of small pieces that burned up as they re-entered the Earth's atmosphere.

The United States is also concerned about the purchase of more submarines by the Chinese navy as well as plans for more aircraft carriers. The Chinese once had a small Navy. Now the United States is keeping an eye on the growing service amid concerns over Taiwan.

The concerns include "China's near-term focus on preparing for contingencies in the Taiwan Strait, including the possibility of U.S. intervention, which is an important driver of its modernization," the report says.

Additionally, the Chinese have placed about 100 more short-range missiles on the shore opposite Taiwan in the past year, it says.

Pentagon officials worry that the continued increase in Chinese military spending is slowly tipping the balance of power between China and Taiwan in China's favor. The United States has said it would help defend Taiwan if China invaded.

The report also says the PLA is "pursuing comprehensive transformation from a mass army designed for protracted wars of attrition on its territory to one capable of fighting and winning short-duration, high-intensity conflicts along its periphery against high-tech adversaries."

Such an army, the report says, would have "the greatest potential to compete militarily with the United States and field disruptive military technologies that could, over time, offset traditional U.S. military advantages."

The United States says that the lack of transparency by the Chinese on its spending poses "risks to stability by increasing the potential for misunderstanding and miscalculation," and that China has yet to explain to the international community the purpose of its military expansion, Pentagon officials said.E-mail to a friend

CNN's John Vause in Beijing and Mike Mount at the Pentagon contributed to this report